The Equitable Life Members Action Group has urged the Financial Ombudsman to open a fresh investigation into the mutual society's huge overpayment of bonuses during the 1990s, says this morning's Daily Telegraph.
General secretary Paul Braithwaite presented a report from chartered accountant Burgess Hodgson – produced by EMAG former chairman Colin Slater – which showed the bonus payments meant policy values only matched the value of the society's assets during two brief points in the decade when share prices spiked, according to the Telegraph.
Braithwaite says in the report the policyholders had been misled about the troubled mutual insurer's financial health and should therefore be able to appeal to the ombudsman for compensation.
The matter has been complicated further, says the Guardian, as the Financial Ombudsman has apparently been sending out a factsheet which is written by Equitable Life and puts the company's case suggesting policyholders are not entitled to compensation.
Equitable Members Action Group has criticised the FOS for sending out what it claimed was inaccurate and one-sided "propaganda".
The factsheet claims Lord Penrose’s report was wrong – when it suggested the insurer's former management had engaged in "dubious" financial practices and cuts to people's investments announced in 2001 were an attempt to claw back excessive payouts it had made to policyholders in earlier years. Equitable claims this is not the case in this factsheet.
Cardiff-based Ethical investment adviser Ethical Financial Limited has gone bust, reports the Guardian (highlighting a Money Marketing story), leaving clients with losses approaching £1m.
The firm – which had 19 advisers - apparently closed its doors to business last week, leaving investors with losses ranging from £3,000 to £200,000.
However, the problem may be a little more complicated than hoped, as the firm asked its clients to invest directly in the company and buy "preference shares” an interest rate of between 7% and 10%.
Because these were a direct investment, investors will lose their money because direct investments are not covered by the Financial Services Compensation Scheme.
Millions of people will get the chance to boost their state pensions by a total of up to £103m, continues the Telegraph, as the Government has accepted it should have warned them about shortfalls.
The national press exposed the problem in 2003 but the Inland Revenue and the Department for Work and Pensions at the time insisted it was up to individuals to keep track of whether they were paying sufficient NI Contributions (NICs) to earn a full state pension.
Up until 1998, its had been down to these departments to warn people who had not paid enough they needed to top up contributions if they wanted to receive a full pension, but a computer problem brought an end to the sending out of letters.IFAonline
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